Japan Company produces lamps that require 3 standard hours per unit at a standard hourly rate of $12.00 per hour. Production of 8,900 units required 26,170 hours at an hourly rate of $12.20 per hour. What is the direct labor

(a) rate variance,

(b) time variance, and

(c) total cost variance? Enter favorable variances as negative numbers.

Question

Alisson

Business

20 May, 00:25

Japan Company produces lamps that require 3 standard hours per unit at a standard hourly rate of $12.00 per hour. Production of 8,900 units required 26,170 hours at an hourly rate of $12.20 per hour. What is the direct labor

(a) rate variance,

(b) time variance, and

(c) total cost variance? Enter favorable variances as negative numbers.

+4

Answers (1)

Know the Answer?

Jamir Lynch · Answer 1

(a) rate variance = $ 5,234, Adverse

(b) time variance = $ 6,360, Favourable

(c) total cost variance = $1,126, Favourable

Explanation:

(a) rate variance,

rate variance = (Standard Rate - Actual Rate) * Actual Hours

= ($12.00 - $12.20) * 26,170 hours

= $ 5,234, Adverse

(b) time variance, and

time variance = (Standard Hours - Actual Hours) * Standard Rate

= (26,700 hours - 26,170 hours) * $12.00

= $ 6,360, Favourable

(c) total cost variance

total cost variance = rate variance + time variance

= $ 5,234, Adverse + $ 6,360, Favourable

= $1,126, Favourable